Viacom Sues Former Harmonix Shareholders

Lawsuits in the corporate world are a pretty common occurrence, but as members of the general public, we are rarely privy to what actually goes on inside the halls of justice as litigants plead their cases. Sometimes the reason for this is primarily due to the two parties choosing to settle out of court, while other times the case discusses information that may be of a sensitive nature. However, the case between Viacom and former shareholders of Harmonix is now being battled in court for a tidy sum and has piqued public curiosity because it reminds us that corporations are entities that have the same rights within the legal system that we all enjoy as private citizens.

When electronics giants from the video game world get involved in legal battles the cases generally fall into one of only a few different categories. The typical scenario is a corporation vs. some private citizen such as the infamous case between Sony and George Hotz or Sony and the retailers of the Jailbreak mod-chip. Other times, groups of citizens band together and bring forth a collective lawsuit where a settlement benefits all of the people who are part of the groups. This kind of lawsuit is commonly known as a class-action lawsuit, such as the lawsuit brought against Sony after the theft of private data following a data breach this past April (a situation that Sony has now taken steps to avoid happening again in terms of both security and their terms of service agreement). But this IS America and corporations have the right to sue their shareholders too! Wait… what?!

In a bizarre turn of events, Viacom, the entertainment giant and former owner of Harmonix Music Systems, has brought a lawsuit against the former shareholders who held stock in Harmonix, which was once listed as a subsidiary of Viacom. How much is Viacom suing the Harmonix shareholders for? The figure is approximately $131 million.

Viacom alleges that the price is a refund of payments sent to the shareholders. Payments that, the company argues, were miscalculated. The lawsuit in question was officially filed in a Delaware court last Friday, and a full copy of the 27-page legal document can be found on TheHollywood Reporter‘s site.

Some may remember that Harmonix Music Systems was originally an independent entity, but when the Rock Bandfranchise and the plastic instrument craze hit their peak, Viacom acquired the company in 2006 and made it one of their subsidiaries. Unfortunately, the plastic instrument bubble burst, which left Viacom struggling to make a profit on the Rock Bandfranchise. As a result, Viacom was forced to sell Harmonix and the associated assets earlier this year. While Viacom enjoyed a healthy tax break from the sale, the actual financial gain was a mere $50, less than the cost of a copy of Rock Band.

While this is the first official lawsuit filing, the battle between Viacom and the former Harmonix shareholders has been going on since last December as the shareholders state that the company owes them $13 million due to alleged unfair business practices. The lawsuit filing by Viacom was viewed as the next logical step after the two parties were unable to come to some kind of agreement during the Resolution Accounting proceedings. No doubt that this whole thing will continue to grow as the two sides do battle in court and we’ll keep you posted as the story continues to develop.